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Janice France-Pettit: Start teaching your children about saving now

Union Bank

Posted: June 18, 2011 1:55 a.m.
Updated: June 18, 2011 1:55 a.m.
 

One of the greatest gifts a parent can give his or her children is to teach them financial responsibility, and it is never too soon to convey the importance of savings.

Showing children how to save and develop a healthy relationship with money at an early age may serve them well throughout their adult lives.

Here are some suggestions to help teach your child how to build his or her savings and to help develop a sound financial future:

Begin when they are young

Many experts agree that it’s wise to start teaching children about money as early as possible. Start with the basics.

For example, show your child coins and teach him or her how to identify by size and color. Little ones enjoy playing games, such as grocery store or restaurant, and that can be a fun way to show him or her how money is used and exchanged. 

School-aged children are ready to learn the difference between needs and wants, the value in saving and budgeting and the consequences of overspending. When they receive money for their birthday, or if they are receiving an allowance, talk to them about the importance of paying themselves first.

Open a savings account
Set up a savings account at your bank and show your children how to deposit money into their account.

Introduce some basic banking concepts, such as interest, and explain how compounding helps money grow. Take him or her with you when you do your banking, so children can learn how to be hands-on in his or her money management.

Show them ways to earn

Nurture the entrepreneurial spirit in your child, and inspire his or her to earn his or her own money. 

Encourage them to identify extra chores around the house that wouldn’t normally be their responsibility and negotiate a fair price to do the extra work. Organize a family yard sale, and let them sell old toys or other belongings.

Older children might be ready to baby-sit or do yard work for neighbors to earn some extra cash.  Children learn to respect money when they work for it, and may think twice before spending it on frivolous items.

Establish goals
Establish financial goals with your children and show them how to reach the goals by saving.

Have your child select a toy or game and together find out how much it costs. Have your child draw a chart that illustrates his or her goal and as he or she puts away a little every week, mark his or her progress on the chart to track it visually.

Set a good example
Children learn by example, so take the lead and model financial responsibility.

Talk about household finances with your child. When saving for a family vacation or other big expense, show him or her how much it will cost, and how you will save money to pay for it.

Bring kids along with you on shopping trips and show them how you shop wisely. If your child sees you shopping for the best deal before making a significant purchase, he or she is more likely to do the same.

Keep up the encouragement
Praise your child for any amount of savings activity, and consider matching what they are able to put aside.

If your child gives in to temptation and blows his or her savings, show him or her how to get back on track to rebuild his savings account.

Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, Santa Clarita Valley, San Fernando Valley and Antelope Valley region.

The foregoing article is general information about teaching your kids how to save and is not considered financial or tax advice from Union Bank. Please consult your financial or tax adviser. France-Pettit’s column represents her own views, and not necessarily those of The Signal. Visit www.unionbank.com for more information.

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